As with China, Japan and the rest of the world, India, the 10-member Association of Southeast Asian Nations (ASEAN) and South Korea are also suffering from declining economic and industrial growth, mainly due to decreased export orders. Although economists' numbers show reduced growth, many analysts are optimistic about Asia's ability to bounce back.

A paper by the United Nations' Economic and Social Commission for Asia and the Pacific (ESCAP) says that Asian countries are hit by "plummeting exports, from the double-digit growth of the past decade to double-digit declines, declining domestic demand and rising unemployment."

According to the ESCAP paper, unemployment is projected to rise in the region by up to 23 million workers in 2009 due to drops in export demand. In January, the export decline reached most of Asia, with drops in Malaysia by 34 percent, Singapore (40 percent), the Philippines (41 percent), Taiwan (44 percent), South Korea (34 percent), Thailand (27 percent) and India (16 percent).

In February, however, the drop was less severe for most countries, except China. China's export decline increased to 26 percent. This is important to note because over 60 percent of China's imports come from the rest of Asia and about half of the components assembled in China are sold to wealthier nations, The Economist notes.

"If China's exports to the U.S., Europe and Japan decline, it will buy less imports of parts that are used in making the exports," Malaysia's The Star Online reports.

Additionally, "given the regionally integrated nature of the production base in Southeast and East Asia, these import declines reflect the beginning of an industrial crisis," ESCAP wrote. "Countries that rely on manufacturing exports are worst hit," The Star Online adds.

As such, ESCAP projects economic growth in the Asia-Pacific region's developing countries to fall from 5.8 percent in 2008 to -0.7 percent in 2009. The Economist predicts a more depressing 2009 with its economic growth forecast for Malaysia at -3 percent, Singapore -7.5 percent, Thailand -4.4 percent, Indonesia -1.3 percent, South Korea -5.9 percent and Taiwan -6.5 percent.

Further, the International Monetary Fund (IMF) lowered its growth forecast for emerging Asian nations (including China) from 3.3 percent to 4.4 percent in 2009, Agence France-Presse reports. It marked 2010 growth at 5.4 percent from 6.0 percent.

India is the only one among this group of Asian countries to have positive growth expected in the range of 4.5 percent, as forecast by the IMF, to 5 percent as projected by ESCAP. Still, India's economy is suffering from lack of investment, which accounted for 39 percent of its GDP in fiscal year 2008, the New York Times says. In the last quarter of 2008, foreign loans and direct investment fell by nearly a third.

"The sudden slowing in the flow of foreign funds will make it harder for the country to grow fast enough to pull hundreds of millions of people out of stifling poverty," the New York Times notes.

Jahangir Aziz, chief economist for India at JPMorgan Chase, tells the New York Times, "If India wants to go back to the 8 to 9 percent growth rate, private investment and low cost of capital is essential."

Despite all the pessimism, analysts are predicting a recovery, with improvements in the economic situation already being seen.

For the first time in five months, Indian manufacturing recently expanded. The ABN AMRO Bank purchasing managers' index (PMI) climbed to 53.3 percent in April from March's 49.5, thanks to a surge in new orders, Reuters India reports. A PMI above 50 signals expansion.

Manufacturing makes up about 16 percent of India's GDP, and the Reserve Bank expects its economy to pick up at around 6 percent in late 2009/early 2010 — somewhat higher than IMF and ESCAP's expectations. Standard & Poor's says India's economy would grow by 5.8 percent in 2009, making it the second-fastest growing economy should China grow at 8 percent, BusinessWeek notes.

As far as jobs go, more than 60 percent of companies in India are still hiring with salaries expected to increase by 8.2 percent in 2009, according to a recent survey by Hewitt Associates.

Plus, despite the slowdown, foreign companies are still investing in India, albeit less than in previous years. BusinessWeek reports that PepsiCo plans to spend $500 million, Universal Success Enterprises of Singapore is injecting $17.5 billion in infrastructure projects, Norway's Telenor is investing $3.2 billion in Indian telecom and Marriott International plans to build 24 new hotels in India. That does not include domestic companies investing in their country and all kinds of outsourcing firms looking to India for growth.

The same goes for the Philippines. According to the Business Process Association of the Philippines, as reported by The Philippine Star, 95 percent of the outsourcing industry's executives and human resources managers predict employment growth of up to 200 percent. This is due to the expected flow of foreign exchange via business process outsourcing operations.

The rest of Asia expects similar results. According to Morrison Foerster, "there is real hope and expectation in Asia that China and other Asian countries such as the Philippines and Thailand will benefit from the global recession as companies seek more actively to cut costs through outsourcing to lower cost jurisdictions." Gartner (via Morrison Foerster) reported that outsourcing will go up by 17.7 percent in Asia in the next five years, 22.7 percent in Singapore in particular.

Because of continued business interest in Asia and the fiscal stimulus that its governments have launched, analysts are counting on Asia to emerge from the downturn more rapidly than other regions. According to The Economist, Singapore, South Korea, Taiwan and Malaysia have all announced fiscal packages of more than 4 percent GDP for 2009, twice as high as the United States' stimulus package relative to its GDP this year.

"Thanks to a large fiscal stimulus and the healthier state of private-sector balance-sheets in most economies, domestic spending (consumption and investment) should revive earlier ... rising perhaps 7 percent next year, up from 4 to 5 percent this year. ... Indeed, add in Japan and total Asian domestic spending looks set to overtake America's next year," The Economist notes.

Additionally, earlier this month the 10 ASEAN countries, China, Japan and South Korea agreed to set up a $120 billion emergency currency pool to boost liquidity and help the region overcome the global crisis, Agence France-Presse reports. Japan and China will contribute $38.4 billion each and South Korea tossed in $19.2 billion. The rest of the fund will stem from the other countries involved.

The Asian Development Bank (ADB) sees Asia potentially leading the way out of the recession even after predicting only a 3.4 percent growth for the region in 2009 — far less than the IMF and ESCAP forecasts.

"Over the long term, developing Asia is starting the process of rebalancing growth from excessive dependence on external demand to greater resilience on both consumption and investment," ADB President Haruhiko Kuroda tells AFP. "Already there are signs that domestic consumption is remaining strong in Asia and may well lead the way out of this downturn."

Resources

Economic and Social Survey of Asia and the Pacific 2009
United Nations Economic and Social Commission for Asia and the Pacific, March 2009

Feeling Asia's Economic Pulse
by Martin Khor
The Star Online, April 27, 2009

Regional Economic Outlook — Asia and Pacific Global Crisis: The Asian Context
International Monetary Fund, May 2009

IMF Sees 'Long, Severe Recession' for Asia
Agence France-Press (via The Times of India), May 6, 2009

India, Suddenly Starved for Investment
by Vikas Bajaj and Somini Sengupta
The New York Times, May 5, 2009

Should You Move to India for a Job?
by Aseem Prakas
BusinessWeek, May 1, 2009

13th Annual Salary Increase Survey: India Inc. Braves the Downturn
Hewitt Associates, Feb. 19, 2009

Business Process Outsourcing Sector Expects 200% Increase in Jobs this Year
by Des Ferriols
The Philippine Star, March 6, 2009

Global Sourcing Trends in 2009
by Alistair Maughan, Julian S. Millstein and Nigel Stamp
Morrison Foerster, January 2009

Crouching Tigers
The Economist, May 13, 2009

ASEAN, China, Japan, SKorea Finalise Crisis Pact
Agence France-Presse, May 3, 2009